The UK and Kenya-based consumer finance company M-KOPA is nearing a close on roughly $160 million in Series F equity financing, led by its longtime investor, Sumitomo Corporation, ImpactAlpha has learned.
An email notification to M-KOPA shareholders, reviewed by ImpactAlpha, reveals that about half of the new funding will provide fresh capital for the company, while the other half will offer early M-KOPA shareholders, including participants in its employee stock ownership plan, the option of an exit.
The financing round values new shares at approximately $37.02. For the secondary transaction, providing the exits for employees and other shareholders, M-KOPA’s shares are being priced at approximately $27.15 for preferred shares and $26 for ordinary shares.
M-KOPA, an early adopter of the pay-as-you-go model that helped expand access for African consumers to products like solar lanterns, appliances and even electric motorcycles, has raised more than $590 million in debt, equity and grants since 2011. M-KOPA has more recently focused on financing purchases of smartphones.
“M-KOPA can confirm that there is a fundraise underway, however due to confidentiality requirements, we are unable to provide further comment at the present time. We will provide additional detail once we are permitted to do so,” the company told ImpactAlpha.
Sumitomo declined to comment.
Legal challenge
M-KOPA’s latest round of funding comes as the company is being challenged in court over employee shareholders’ rights. The case, filed in May in Kenya’s Employment and Labor Relations Court, alleges that shareholding restructuring at M-KOPA between 2019 and 2022 protected preferred shareholders from dilution with the creation of a new class of shares. The result for ordinary shareholders, including participants in M-KOPA’s employee stock ownership plan, was “the disproportionate and irregular dilution” of their shares, the plaintiff’s petition states.
It also alleges that the creation of the new “growth share” class was designed to advantage white and foreign employees and shareholders over Kenyan and other African shareholders.
M-KOPA has called the allegations “baseless, disingenuous and entirely false. Racial disparities do not exist at M-KOPA.” (For more on the petition and the allegations, check out Adonijah Ndege’s coverage for TechCabal.)
Business evolution
M-KOPA was one of the early movers in Africa’s off-grid solar sector. It was incubated and founded 15 years ago by Nick Hughes, Vodafone’s former head of global payments, who had launched Kenya’s ubiquitous M-Pesa mobile money service, alongside co-founders Chad Larson and Jesse Moore. Its early days were focused on financing and selling off-grid solar lighting to Kenya’s energy-poor households.
Over the years it has shifted to mobile phone finance.
“We became known as an off-grid energy company, and we didn’t reject that moniker,” Moore, M-KOPA’s CEO, told ImpactAlpha in a 2023 interview. “But our part of solar has always been financing the solar. We have always fashioned ourselves as a fintech company.”
The evolution to mobile phone finance tracked customer demand, explained Moore. “They tell us what they need.”
While 86% of adults own a mobile phone worldwide, those who do not say the cost of the device is the biggest barrier, according to the World Bank’s 2025 Findex Report on global financial inclusion. Africa and Asia face the biggest phone affordability gaps.
M-KOPA says it has issued more than $1.5 billion in credit to more than five million customers across its product lines. It employs more than 2,000 staff members and runs a network of more than 30,000 agents.
M-KOPA’s newest funding round will usher in a new phase of growth. Its steady progression from early employees’ sweat equity, to catalytic grants and investments from Shell Foundation, Acumen and Blue Haven Initiative, to larger private equity and corporate backing from Generation Investment Management and Sumitomo, has made M-KOPA a darling of the impact investing sector and Nairobi’s vibrant startup scene.
An ImpactAlpha article in 2016 detailed M-KOPA’s early efforts to access commercial bank loans and lower its cost of capital by collateralizing its accounts with low-income solar customers, which has since become standard practice in the off-grid energy sector.
Employee payouts
With the new financing round, participants in M-KOPA’s employee stock ownership plan, or ESOP, are eligible to cash in on the sizable growth they helped fuel. That includes the petitioner in the Kenyan legal case, former M-KOPA receptionist and human resources administrator, Elizabeth Njoki who left the company on good terms. Although it did not comment on the Series F round specifically, M-KOPA acknowledged Njoki’s shares are “currently being offered for purchase alongside other ESOP holders in an arm’s length transaction at 6x return.”
M-KOPA has more than 100 ESOP participants, as well as 250 recipients of the “growth shares” that are the focus of the petition’s racial discrimination allegations. The petition claims ESOP participants and other ordinary shareholders of African descent were disproportionately diluted as white and foreign shareholders were topped up with the new class of shares.
“[M-KOPA] was recognized as one of the fastest growing companies in Africa and therefore, the outcome of the Anti-Dilution Plan grossly impacted the ability of the Kenyan employees and ordinary shareholders represented in this petition from fairly participating in and enjoying the benefits of the success and growth of the company, which they had contributed to,” the petition states.
M-KOPA says the majority of both ESOP and growth shareholders are of African descent.
“The allocation of growth shares is based on seniority of roles in accordance with an approved compensation formula, developed by third party HR consultants and approved by the board of directors. The process was led by the chair of our HR board committee, an independent Kenyan director specializing in employment matters,” the company said.
“Race does not and has never featured in our compensation decisions or growth share allocation,” it continued. “Such an approach is irrational, counterproductive to business objectives and would not have enabled the company to grow to the size and scale that it has done over time, attracting reputable third-party investors.”
In addition to M-KOPA, the petition names two of its investors – British International Investment and Generation Investment Management – as “interested parties.” It claims that BII and Generation, “being the largest preferred shareholders, stood to benefit the most from the issuance of new shares without the expected dilution effects” under M-KOPA’s shareholding restructuring process.
A spokesperson for BII said the legal action is “between the plaintiff and the company”.
“The claim is being defended and the allegations are false. The company has acted appropriately and the racial discrimination claims have no basis,” the BII spokesperson said. “We consider the claim to be an abuse of process and have filed an objection with the Kenyan legal authorities. As the matter is ongoing, we will not be offering any further comment at this time.”
Generation Investment Management, the sustainability investment firm co-founded by Al Gore, declined to comment.
Employees who exercise their exit option would, “like in most standard secondary sales of this nature, release the company from all claims, including any claims raised by Ms. Njoki, which are completely baseless and unfounded,” M-KOPA told ImpactAlpha.
“Nobody is forced to sell and if people prefer to hold onto their shares because they believe they will be more valuable in the future, or if they wish to pursue a claim against us they can,” the company continued. “The transactions taking place are between willing buyers and sellers.”
